Proof of funds

Hey guys,

I want to start making some offers on properties, either to wholesale or renovate myself. The first problem I’m encountering is the hard money lenders won’t give me a proof of funds letter without a sizeable amount of money in the bank( most are saying 15k-20k). I don’t have this amount of money in the bank, but I do I have friends with money, who if I could present a deal too, I’m sure I could partner with. But I cant present a deal, because I can’t make any offers, cause I don’t have proof of funds! I just don’t understand why they care if you have money, if the loan is based on the equity of the property, they can always just decline the loan app. If I were a hard money lender I would be giving POFs to any body who would take one. I’m sure many of you will recommend working with FSBOs or private sellers who don’t require proof of funds, but I did several rehabs when I was younger and they were all REOs, so I’m kind of comfortable with them, could never really find any private sellers willing to take a big enough hit, but I never really did any direct mail marketing or stuff like that, but anyway, maybe somebody has dealt with this and can point me in the right direction. Thanks a lot guys


You can use a conventional / FHA / VA approval letter from a mortgage broker, lender, etc. Then when escrow opens you substitute hard money or private money for your conventional approval. 

I typically go into most transactions with a conventional approval even though I intend to substitute something different.

The key thing sellers and their agents want is to know your approved, just make sure you still have contingencies until you have everything approved and go to fund.


Thanks GR, unfortunately I won’t qualify for a conventional loan at this time.

When buying/selling as an investor, you need money or credit; but it does not need to be your own.

Consider creating a trust entity for a flip or two. You are bringing to the table your ability to secure the hard money loan, your partner will bring to the table cash needed for proof of funds.

Then, create a proof of funds document as trustee or beneficiary of the trust.

Incidentally, if it were me, I would secure the hard money lender’s offer in writing on their letterhead stating after proof of funds, they will close your loan…then after your trust gives the proof, if they do not make the loan, they are subject to a counterclaim by injuring you for the losses of the profits you would have earned; both compensatory and punitive.

Not likely you will need to do that as they are in business to lend money; so if you have your proof of funds, you can get this deal with a partner using a trust.

Hope this helps.